Are you a small business owner? If so, you may not be thinking about estate planning too much. After all, you are working hard every day to manage your employees, maximize profits, and ensure your business is a success. If you are considering getting married and you own a small business, however, you may want to consider how a prenuptial agreement might be beneficial both for your new family’s finances and your estate planning. Let us review four reasons why.
1. You Built Your Business Before Your Marriage. If you built your business prior to your marriage, you may want to preserve your financial interest in the business while you are married and be able to choose who will inherit it after your death. Take some time to talk this through with your future spouse.
2. You Want to Acknowledge Your Spouse’s Contributions. If your new spouse has already contributed to the success of your business, or he or she is going to take on a bigger role when you are married, a prenuptial agreement can help him or her, too! You might consider structuring an agreement so that your spouse acquires a financial stake in your business over time as he or she contributes to handling matters at home while you focus on work, or directly work with your business.
3. You Want to Separate Business from Family. Even though you may not want to think about death or divorce, it is important to consider the possibility when you own your own business. You may decide in a prenuptial agreement that in the event of a divorce, you will buy your spouse out of the business by giving him or her other financial assets, because it could get messy to continue working together or making company decisions together if you are divorced.
4. You Want a Succession Plan in Place. Ultimately, part of both business succession planning and estate planning is ensuring your business is secure after you pass away. You can address this in a prenuptial agreement as part of your estate planning, by outlining your future spouse’s continued role in the business, and what you would expect for any children you may have.
For assistance developing a prenuptial agreement as part of your estate plan, please reach out to our office to schedule an appointment.